The European Union is determined to establish an oversight body to enforce anti-money laundering rules within the EU, but skeptics fear it will not work.
The European Commission has published an ambitious and comprehensive action plan outlining the specific measures it will take over the next 12 months to better implement, monitor and better coordinate rules on combating money laundering and its financing. terrorism.
Executive Vice President Valdis Dobrovskis“We need to put an end to the infiltration of dirty money into our financial system,” he said. There should be no weak links in our rules or their implementation. We are committed to implementing all of these actions quickly and consistently over the next 12 months. We also support the EU’s global role in setting international standards for combating money laundering and terrorist financing. “
“What we need to aim for is a strong EU supervisor who can act in case of failure, for example, the national supervisory authorities can act,” the Latvian European Commissioner said in an interview. “We have strong strict rules against money laundering, but enforcement is unequal,” he added.
The EU’s action plan (6 pillars) is in the public consultation stage with the authorities, stakeholders and citizens having the right to submit their comments by 29 July.
The Commission’s action seems to be imperative as the following figures speak for themselves about money laundering worldwide:
Some EU countries arebest in the world in implementing technical recommendations to combat money laundering, but this does not necessarily lead to impressive results:
In the European bloc, only 1.1% of the estimated illicit revenue is seized by the authorities . The rest of the revenue remains in the hands of criminals. However, the situation in other countries around the world is even worse.
Financial staff around the world admit that the current framework for reporting suspicious activity is not effective enough: At least 9 out of 10 reports of money laundering in the authorities are in fact of no value to investigators.
The big picture
The numbers cause dizziness:
4.5 trillion. dollars: This is estimated to be the overall overall size of money laundering activity worldwide by 2020: The United Nations Office on Drugs and Crime estimates that global money laundering accounts for 2% to 5% of the world’s GDP. .
At European level and specifically among the “28”, the percentage is 0.9% of the GDP of the 28 countries, according to the publication of Politico .
The money remains with the criminals
The percentage of the estimated criminal income in the EU that was not confiscated and remains in the hands of criminals, according to its reportEuropol since 2016, amounts to 98.9% . At the beginning, only EUR 1.2 billion ended up at the EU level.
Reports do not translate into research
Financial institutions are required to report suspicious transactions to the central authorities. Although laundry reports have been steadily rising in recent years, only 1 in 10 reports end up in research. It is noted that this ratio has remained the same since 2006.
Two-thirds of all suspicious activity reports sent to EU authorities between 2006 and 2014 came from only two countries – one of which is no longer a member of the bloc. the United Kingdom and the Netherlands.
Comparison of surveillance measures
Spain is the most effective country in implementing measures to combat money laundering and terrorist financing, according to the Financial Action Task Force ( FATF ) , a global watchdog that oversees global standards. guiding countries’ action on such issues.
The FATF’s recommendations lay the groundwork for diagnosing whether the 40 types of technical recommendations are applied by countries and assess the effectiveness of the measures in 11 criteria (including proper oversight of institutions or adequate prosecution of those responsible).
FATF analysis shows that, in many countries, measures are not effective despite the implementation of technical recommendations. Eight EU countries are among the top 20 in the world. Some members of the bloc, such as France and Germany, are not included in the FATF’s global report.
What triggers the alarm
According to reports made in European institutions between 2013 and 2014, 20% have a pattern of suspicious transactions, 19% have suspicious deposits, 14% have suspicious cash withdrawals, 12% have unusual customer behavior, 5% % cash transactions, 5% transaction fraud.
The most common categories of fraud are:
Tax fraud (39%), fraud and fraud (30%), drug trafficking (15%), cybercrime (6%), corruption (4%).
Who mentions – and who doesn’t –
Credit institutions and banks are the main source of suspicious activity reports to EU intelligence agencies .
Differences from country to country are evident, according to Europol , with some sectors of the country’s economy emerging as top in the percentage of reports they make of money laundering.
What more do credit institutions, banks, insurance companies, savings banks and central banks report? In addition, the exchange offices and cooperatives are small on the list. At the same time, the first to come to the reports are the notaries of the State, the Gambling Industry, the accountants.
Some digital currency sectors are being monitored more closely by the EU’s supervisory bodies, according to the 2018 directive.
About 85 to 95% of the country’s leaders believe there is no proper legal framework for reporting suspicious transactions. and the subsequent cessation or suppression of such crimes, according to an FFIS investigation.
While consumers are increasingly using electronic payments and cards, cash remains “the means of criminals to facilitate money laundering by illegal activities,” according to Europol.
Rinsing methods remain “overwhelmingly traditional”despite the rise in cybercrime, Europol reports.
Illegal cash flows to and from the EU are more difficult to track than those of drugs or counterfeit products, in part because most of them are located at airports and depend on changing routes.
However, Europol points out that Switzerland is the leading country in terms of both inbound and outbound cash flows. Russia is also a source of money and a destination for black money, as is Turkey with links to cash transfers in the Middle East. At the same level, China and Nigeria.
The high percentage of high-value banknotes in the EU (eg 500a), which are not commonly used by consumers or businesses, means that there are large amounts of money in circulation that are used for illegal payments.
In addition, criminals can launder money using cash or money-making businesses, or enter the market by buying high-value goods, investing in real estate, gambling, and e-commerce.
In the euro area, in 2014, the total value of banknotes (500 euros) amounted to 30% , while if we add the 100 euro and 200 euro banknotes, we catch 54% of all banknotes.
According to an ECB survey , until 2009 , 56% of European citizens had never seen a 500 euro banknote., while at 200 billion euros the value of banknotes in circulation is estimated, for which we do not know what they were used for.
Looking a little closer,
a pilot study by Transcrime – UCSC found significant differences in the risk of money laundering between regions in three EU countries.
The high risk (dark red) exists in many of Italy’s southern provinces. The survey also found that UK companies have a comparatively more opaque framework for business ownership, with London being the city with the highest risk in the country.